How College Financial Aid Works

Planning for college expenses is one of the biggest financial projects that a family can undertake. Four years of college can cost tens of thousands of dollars -- the average annual cost (tuition plus room and board) at private U.S. colleges is now $35,636 -- and it's increasingly easy to break into the six-figure range, especially for advanced degrees [source: Lewin]. Parents, you've probably wondered just how you'll afford to send your child to the college or university that he or she has dreamed about and earned the right to attend.

We all hear horror stories about how much college costs now -- and will cost in 10 or 20 years (tuition increases between four and seven percent annually).That said, it's not too late to find a way to make paying for college manageable -- not easy, but manageable. Just remember one thing: Paying for college is a family affair. Parents and students must work together to make college affordable. Obviously, the earlier you start, the easier it will be. However, it's never too late to make a difference.

You can save enough to cover all college expenses before your child enrolls.

You can work to pay for all expenses while he or she is enrolled in college.

You can take out loans and pay after your child graduates.

Many people use a combination of the three. Think of these options as a smorgasbord from which you select the approaches that fit your family's payment strategy.

In this article, we'll examine how you can use college financial aid -- from scholarships to work-study jobs to student loans -- to help pay for that all-important education. Let's start planning on the next page.